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The USA has the strongest economy in the world: Ranked 6th in the world for Ease of Business, the US is an innovation and tech capital, with a well-educated and highly-skilled workforce.
As the world’s economic powerhouse, the USA is a prime location for hiring overseas staff, but in doing so it is crucial to follow American labor laws and employment etiquette.
In this guide, we set out everything you need to know about hiring employees in the US.
337.341M (Labor Force 163.5 million)
United States Dollar (USD)
GDP per capita
Ease of Doing Business
6th in the world
No legal requirement (though 10-15 days is common)
After falling into recession in 2020 the US economy rebounded strongly in 2021 with an annual GDP growth rate of 5.67%, a 2.3% increase on the pre-pandemic rate. Through 2022 the growth rate has slowed, with the OECD forecasting an annual GDP growth of 2.5%, and a fall to 1.3% in 2023.
Business operating costs continue to increase. Tightness in the US labor market has led to wages increasing across the country. Lingering issues with global supply chains and the conflict in Ukraine are sighted as factors contributing to rises in the price of commodities. As such, at 7.7% in Q4 of 2022, inflation remains above the Federal Reserve’s 2% target.
In the United States, labor laws are imposed at the federal, state and local level. The US differs from other advanced economies in that its labor laws do not provide for many of the minimum rights of employment and benefits that are seen in European countries or Canada. For example, US employers are not required by law to pay employees for time not worked (paid vacation) and the concept of at-will employment means employers can dismiss employees without having to establish ‘just cause’.
At the Federal level, the US Department of Labor enforces a number of key pieces of employment legislation, including;
State law tends to mirror federal law, with some states mandating more employee protections and employment benefits than others. For example, California has extensive employment laws, including additional legislation relating to pay equity and transparency. One example is section 432.3 of the California Labor Code which prohibits employers from seeking or relying on salary history information when assessing candidates’ suitability for a job.
American business culture is highly individualistic and entrepreneurial. American employees tend to be highly motivated to succeed and pursue ambitious career goals. Employers who are able to successfully harness these qualities, by setting the right incentives and creating suitable work environments, are likely to succeed.
A professional attitude in terms of punctuality and service level are important characteristics but work ethic is considered the most valuable attribute. American employees work long hours with 50-hour weeks common across many industries. The USA has an extremely egalitarian business culture, with an individual’s accomplishments and talents respected more than their age or background.
A final point to keep in mind is the level of legal controls. The USA is a litigious country, with companies often relying on litigation to settle disputes. We strongly suggest taking legal advice before entering into business transactions in the USA.
Recruitment is handled online in the USA with job portals and online interviews used to identify and assess candidates. With high competition for most jobs, the screening process is an important aspect of the hiring process. Recruiting software is often used to deal with large numbers of candidates, with pre-employment aptitude testing used widely. The types of tests used vary between industries and roles but cognitive and situational-judgment assessments are popular.
The strength of the resume (CV) and cover letter is also an important consideration. Whereas European cultures exercise modesty and look for potential in candidates, the US values self-confidence and candidates are expected to go into detail on their past successes and emphasize what it is they can bring from day one. Of course, a self-confident resume and cover letter must be backed-up by a strong performance in any interviews whether online or in-person.
When interviewing potential employees in the USA, employers must comply with various federal and state laws. For example, employers need to be aware of laws relating to discrimination such as Title VII of the Civil Rights Act and the Age Discrimination in Employment Act. Keep in mind that states go further than others in protecting the rights of job seekers in terms of discrimination categories and privacy. The need for care and expertise during the recruitment process is another reason to consider our USA Employer Record and PEO services.
The specific format of job interviews varies across the USA. Some companies choose to conduct all of their interviews online whilst others opt for a combination of online and in-person interviews. As with job interviews in Europe or Canada, punctuality and presentation are important aspects of job interviews in the USA.
Questions about salary history are regulated by state law. Among states and local governments, the trend is moving in the direction of prohibiting employers from requesting information or asking candidates about their salary history.
See Industry Dive’s running list of states and local governments (city administrations) that have prohibited employers from requesting salary information from potential employees.
When changing jobs, the typical salary increase in the USA is around 5%. This figure is an average that represents differences between industries and age brackets that employees fall under. The rate of annual salary growth tends to be higher for younger employees, for example, in 2021 workers aged 25-34 received a 9.8% salary increase when changing jobs whereas workers over the age of 55 received an average increase of 4.1%.
The onboarding process is an important step in the hiring process. In the USA, workplace interactions are predominantly informal and colleagues are generally relaxed about sharing details of their personal lives with one another in the interest of building strong working relationships. In the USA, an effective onboarding process helps new employees get up to speed with company processes whilst also ensuring they have the opportunity to get to know their new colleagues
Keep in mind that the onboarding process also involves legal obligations, such as establishing a contract of employment. At Horizons we have the relevant legal expertise to handle the onboarding of employees in the USA – contact us for a free consultation on your hiring project in the USA. Once the new employee has accepted the offer letter and signed the contract of employment the onboarding process moves onto the next phase: integrating the new employee.
Remote working and hybrid working models have been growing in popularity in the US over the past decade, and the trend accelerated in 2020 with the Covid19 pandemic. A 2022 study by McKinsey found that 58% of Americans (involved in the study) have the opportunity to work from home at least 1 day per week. The same study found that a large majority of American workers are in favor of flexible or hybrid working models – a key consideration for employers designing employee benefits packages.
A number of tools are used to manage and facilitate remote working arrangements in the USA.
|1 Jan., 2023||New Year’s Day|
|25 Nov., 2023||Black Friday|
|24 Dec., 2023||Christmas Eve|
|1 Jan., 2023||New Year’s Day|
|3rd Monday in January||Birthday of MLK, Jr.|
|3rd Monday in February||Washington’s Birthday|
|Final Monday in May||Memorial Day|
|19 Jun., 2023||National Independence Day|
|04 Jul., 2023||Independence Day|
|1st Monday in September||Labor Day|
|2nd Monday in October||Columbus Day|
|11 Nov., 2023||Veterans Day|
|4th Thursday in November||Thanksgiving Day|
|25 Dec., 2023||Christmas Day|
American employees typically expect an annual salary increase that matches or exceeds, the rate of inflation.
A survey by a management consultant specializing in employee compensation, Pearl Meyer, found that the annual base salary increase for all employee groups in the USA amounted to 4.8% in 2022.
Remote working is increasing in popularity across the United States; as such, the quality of the freelance talent pool is improving. However, the concept of ‘at-will employment’ gives US employers greater flexibility than European or Canadian employers. For example, there is no legal requirement for US employers to provide ‘just cause’ when laying off employees.
The benefits of hiring an employee as opposed to a freelancer, include more contractual control. Ultimately the decision will depend on the circumstances of your business – for instance, businesses seeking to fill high-level roles would benefit from a more formal employment arrangement where contractual protections covering IP rights and non-compete clauses could be useful. You may also find it useful to consider a long-term recruitment model, such as Horizons’ retained search service.
Yes, US companies can hire foreigners provided they have attained the relevant certifications from the US Department of Labor – see ‘Alien Employment Certifications’. Only after certification has been approved can the work begin on securing a US work visa from the US Citizenship and Immigration Services. Of course, our team of in-country legal experts can assist with the process, reach out for a free consultation on your hiring project in the USA.
Commonly, businesses choose to set up a local entity in the U.S. in the form of a corporation. Note, incorporation is regulated by state law in the United States (with Delaware being the most popular state for incorporation). The disadvantages of setting up your own legal entity revolve around the steep learning curve and legal costs and getting up to speed with the myriad legal and taxation requirements at the federal, state and local level. This is what makes an Employer of Record particularly helpful.
By choosing to partner with Horizons as your USA Employer of Record you can benefit from our team of in-country legal and recruitment experts. As well as a rapid market entry, we also provide assistance with necessary processes, including; talent acquisition and in-country HR services, such as the drafting of strong employment contracts and payroll
Recruitment agencies and job portals are viable options for companies who have established corporations however you will also require additional legal services to ensure compliance with US law. Instead of working with multiple stakeholders, many businesses choose Horizons to handle the entirety of your USA hiring project. We are experts in US talent acquisition and, thanks to our established networks and knowledge of hiring markets in different states, we can ensure you hire the best possible workforce in the USA.
Your business can easily hire employees in USA without opening a local entity. We handle local employment law, complex tax regulations, and international payroll in 180+ countries worldwide. All you need to do is focus on your business.